Stake Holder Pensions

boydell

Are our Stakeholder Pensions Safe in the current financial climate?
I don't mean is there a compensation scheme (which has been covered in this forum), but with the state of the footsie at the moment will those of us who retire in the next few years (I am a 62 year old male) actually lose money? That is to say do we stand to get less out of the scheme than we put in?
I am not a financial expert, far from it, but I would have thought the government would have built in a safeguard whereby at worst our pensions would not diminish? Surely if the government want's us all to make our own pension provision they would not have designed a product which does not do the job it was intended to do would they? If this is the case, no wonder Stakeholder take up has been so poor!:(

regards,
boydell.

dunstonh

I don't mean is there a compensation scheme (which has been covered in this forum), but with the state of the footsie at the moment will those of us who retire in the next few years (I am a 62 year old male) actually lose money? That is to say do we stand to get less out of the scheme than we put in?

The stability and volatility of the pension will depend on where you have it invested. If you are invested in a cash fund then the markets will have no impact at all. If you are invested 100% into a medium/high risk FTSE tracker then you will be sufferering all the volatility you hear about. If you are invested into a cautious spread you will still be suffering some volatility but to a lower degree.

The pension wrapper doesnt make or lose money. Its what you invest inside of the pension that does that.

I am not a financial expert, far from it, but I would have thought the government would have built in a safeguard whereby at worst our pensions would not diminish?

Such protection does exist. You either use an IFA for annual servicing which would see the IFA reduce the risk of the investments as you get closer or you DIY or you choose a pension that automatically risk reduces the investments as you get closer.

Surely if the government want's us all to make our own pension provision they would not have designed a product which does not do the job it was intended to do would they?

The options already exist so no need for any Govt intervention.

If this is the case, no wonder Stakeholder take up has been so poor!

pensions need to be sold. Not enough choose to buy one and if they do, they tend to pay in very small amounts. Stakeholders didnt pay enough to keep most of the salesforces running. So, the volume wasnt there. That is why they failed and that is why they are being replaced.

boydell

Many thanks for your comprehensive reply dunstonh... cheers.
regards,
boydell.